Americans receive fewer mortgages, even though rates remain low

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As the refinancing boom continues, fewer Americans are applying for mortgages. The volume of home loans issued by lenders slowed in April to their lowest level since the early days of the coronavirus pandemic, according to a mortgage company Black Knight’s report released on Monday.

The volume of borrowers fixing rates on new loans – either for home purchases or refinancing – fell to its slowest pace since May 2020. The deceleration is taking place even against the backdrop of lower rates. Mortgage rates It fell for five straight weeks in April and May, and rose slightly last week, according to Bankrate’s National Survey of Lenders.

Refinancing at base rate and maturity fell 20 percent from March to April, while cash-in-place refinancing fell 13 percent. Even purchase mortgages were down 6 percent, possibly due to soaring house prices and a shortage of homes for sale.

“Despite the downward trend in interest rates in April across all mortgage products, the decline did not appear to be enough to bring borrowers, especially refinance borrowers, back to the negotiating table,” said Black Knight’s Scott Happ.

The Black Knight estimates that about 14.5 million homeowners can still benefit from refinancing. However, it seems that the most creditworthy borrowers have already taken advantage of refinancing.

One of the features of the COVID-19 housing market is that many Americans with mortgages have excellent creditworthiness. However, according to Black Knight, the credit ratings of borrowers have declined in recent months.

According to the company, the average credit rating for borrowers applying for related loans fell from 757 in December to 749 in April. A similar trend was observed for borrowers who fix rates through the loan programs of the Federal Housing and Veterans Administration.

“As volumes shrink, we see a decline in average credit ratings across all products and purposes, and the share of conventional loans is inferior to the share of government-backed mortgages,” Happ said. “Also not unexpected, given that when rates start to rise, borrowers with higher loans are usually simply not attracted.”

What You Can Do To Get The Best Mortgage Rate

Do your research before contacting a lender. To secure the best mortgage rate, follow these steps:

  • Compare offers: Receive offers from at least three lenders… If you live in an area with limited competition from local banks, you may need to shop online. Pros: shopping comparison can save thousands of dollars during the term of the loan.
  • Look beyond ordinary lenders: The bank or credit union where you keep your money may offer the best home loan deal, but make sure you do some comparisons. Closing rates and costs can vary greatly depending on the lender.
  • Improve your credit rating: Raising your credit is the best way to lower the rate, and it is more effective than increasing the down payment or improving the debt-to-income ratio. The best deals go to borrowers with a credit rating of 740 or higher.

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